Crude benchmarks dipped more than 1% on Wednesday as positive diplomatic signals from Washington and Tehran alongside a massive crude stock draw shifted traders' attention toward the supply-demand balance.
The Front-month Brent futures contract fell 1.5% to $71.89 per barrel. West Texas Intermediate crude futures fell nearly 1% to $68.83/bbl.
Both contracts lost more than 20% on a month-over-month basis on June 30, and on a quarterly basis, the Brent futures contract has lost over 38%, while WTI dropped more than 31%.
US President Donald Trump reportedly stated that discussions with Iran were going very well.
Adding momentum to the diplomatic thaw, Iranian President Masoud Pezeshkian said via the Fars News Agency that certain international financial and foreign exchange restrictions on Iran have already been eased.
Pezeshkian cited the sustained export of Iranian crude oil and newly unlocked avenues for global economic cooperation as direct, early results of these recent diplomatic understandings.
While maritime transit has partially resumed through the reopened Strait of Hormuz, researcher Kpler reported on Tuesday that shipping corridors remain fraught with compliance risks.
Commercial vessel operators find themselves caught between Iranian demands for tightly regulated or heavily tolled exits and strict retaliatory penalties from the US for complying with those local terms, Kpler said.
On the supply side, data from the American Petroleum Institute revealed Tuesday that US crude oil inventories dropped by 6.072 million barrels in the week ended June 26, following a 765,000-barrel draw the previous week, according to a Bloomberg-compiled survey.
The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.
Elsewhere, Ukrainian long-range air strikes hit Russia's oil refinery complex, President Volodymyr Zelenskyy said in a post on X on Wednesday, an attack that will add further pressure on its foe now plagued by growing fuel shortages.